Rockets’ position on Comcast dispute differs from Astros

The Rockets have broken ranks with the Astros, their partners in the parent company of Comcast SportsNet Houston, by informing a federal bankruptcy court they agree with a motion by four Comcast affiliates to keep the partnership under Chapter 11 protection.

The 18-page statement filed with U.S. Bankruptcy Judge Marvin Isgur on Monday is the first time the Rockets have shown their hand in the contentious disagreement between the Astros and Comcast regarding Houston Regional Sports Network, the Astros-Rockets-Comcast partnership that owns CSN Houston.

Isgur will preside Monday over a hearing on the Astros’ motion to dismiss the case and Comcast’s motion to name an interim trustee for the network.

If Isgur dismisses the case, attorneys for the Rockets say the Astros are likely to reclaim their broadcast rights, which were not paid during the last three months of the season. Four Comcast subsidiaries filed the involuntary Chapter 11 case Sept. 27 to prevent that move by the Astros.

Trustee not the answer

Allowing the Astros to pull their rights from CSN Houston, the Rockets say, “would compel the Rockets’ entities to terminate the Rockets’ agreement, thereby causing the network to implode.”

Aside from that phrase, the Rockets’ statement generally strikes a more moderate tone than the sharply worded filings by the Astros and Comcast, although it does agree with Comcast that bankruptcy reorganization is the best way to ensure the network’s survival.

“(Chapter 11) will prove the best means of assuring full payment of creditors, realization of the owners’ equity investments, protection of the network’s business (including its employees’ jobs) and satisfaction of the fans’ expectation of high quality sports media coverage,” attorneys for the Rockets said. “The alternative is liquidation.”

The Rockets also said the team has “no interest in placing blame on any party as it relates to the current predicament.” By contrast, the Astros say Comcast is trying to take the team’s equity interest in CSN Houston through an improper filing, and Comcast subsidiaries say the network’s success has been stymied by the Astros’ opposition to carriage agreements that the team believes do not provide sufficient revenue.

However, the Rockets also oppose Comcast’s request for an interim trustee. Naming a trustee, they say, “will defeat one of the core purposes of the Chapter 11 process … namely, to bring divergent parties together to forge a consensus that will maximize value for all stakeholders.”

Instead, the Rockets propose naming a “responsible officer” to run CSN Houston’s day-to-day operations and suggest the court order Comcast, the Astros and Rockets to negotiate for one week “to attempt to reach consensus on a path forward.”

On other points, the Rockets veer more toward Comcast’s view. They “respectfully disagree with the Astros’ entities and believe that a successful reorganization (under Chapter 11) is possible” for CSN Houston.

‘Structural difference’

In the wake of the Rockets’ statement, Astros general counsel Giles Kibbe said the Astros “respect but disagree with (the Rockets’) position.”

“The two teams have very different media rights deals,” Kibbe said. “In order for the Astros to have a top-tier payroll in MLB, we must receive profit from the network in addition to our media rights fee. The Rockets’ media rights fee, alone, puts them in the top tier of the NBA. They don’t have to rely on the network being profitable. This is a very significant structural difference that causes the teams to view this situation differently.”